The U.S. economy added 467,000 jobs in January and estimates for November and December 2021 were revised to add 700,000 more jobs than previously expected. This is a sign that the labor market is recovering from the tsunami of the global pandemic, but it also means there are plenty of unfilled jobs and a war for talent, says a hiring expert.
“The small and medium sized enterprises, the ones with less brand recognition and less attractiveness, feel frustration more than other industries, like manufacturing, for example, or other sectors that are providing good paying consistent jobs, but they’re not on the priority list of new college grads,” said Alex Chausovsky, Director of Analytics and Consulting, Miller Resource Group.
One crucial development that employers must get a handle on is that people are job hopping. “This is happening in large, large numbers, particularly in those lower compensated fields, fields like construction, and kind of the blue-collar manufacturing side, and retail, leisure, and hospitality. So, it makes it quite feasible for you to go from making $15 an hour to $18 an hour. And that’s enough of a reason for you to quit, that’s a 20% increase in your compensation. And we’re seeing employers increasingly use compensation as a tool to draw talent away.”
This job hopping is unprecedented, Chausovsky says, and this is causing a topsy turvy situation where employees and prospects hold more power in the labor process than ever before. “With many people out of the labor force, you have to pilfer talent from somebody else.”
Chausovsky says there are elements of the employee interview process that can be reformed quickly.
“You can no longer interview the way that you did before. It is not viable to conduct four, five, six interviews and to string a candidate along for eight weeks at a time, because what will happen is that they will just simply take a job somewhere else where they can do it in two to three interviews,” Chausovsky said. “Another notion has to do with the way that companies are compensating people. It really baffles me that you have hiring authorities that will say, ‘well, we’ve always offered engineers out of school a $75,000 a year salary, and that’s what we’re going to put on our job description.’ But if you look at the data, engineers out of school are now getting between $90,000 and $110,000. If you want to be competitive, you can’t just take this, ‘the way that we’ve always done it’ mentality and apply it to the job market of today, you have to evolve, you have to adapt, and you have to really take yourself out of the comfort zone and do things differently.”
Chausovsky concluded that there are two main solutions employers can execute to win the war for talent:
- Develop a comprehensive talent strategy. “The same way that you strategize for product and for market, you’ve got to think about how do we approach all elements of talent, attraction, hiring and retention, and develop strategic initiatives in each one of those areas? If you don’t do that, companies that will do that are going to have a leg up on you.” Chausovsky noted in a recent survey undertaken by Miller Resource Group that only 27% of leaders said they have a talent strategy, while 64% said “no, but we’re working on one!”
- Be driven by data. “You have to use good quality information, whether it comes to your compensation package that you’re offering, or the metrics that you are tracking for hiring or retention of your staff, or even understanding where the priorities lie for candidates. Some people care about money, others care about the challenge of the job, yet others want job security and growth prospects. All these things are measurable. And you must have a system in place and someone who is responsible for keeping up with that data so that they can continue to feed it to you to enable the best quality decision making that’s possible.”
Chausovsky says that 90% of companies are small and medium-sized businesses, and they don’t have the glittering name recognition of a Google and Microsoft — companies that “are working on the bleeding edge of tech.” This means, to compete, companies must assess the dynamics of the job situation, including why the market is so heated and why there are so many job openings.
“The first notion is that if you look at the total number of people working today, as measured by the Bureau of Labor Statistics, we’re still somewhere between two and 3 million below the levels that we had in early 2020 pre-pandemic,” Chausovsky said. “And that the level of job openings today is also somewhere around two to three million higher than the typical number of open positions that you see out there. So those two factors kind of align.”
Chausovsky asserts that, in addition to job hopping, there are two key factors driving the amount of job openings and not enough talent to fill them:
- Forming of new businesses. “If you look at the amount of entrepreneurism, new business formation that has taken place since the beginning of the pandemic, it’s off the charts, it’s like double or triple what it typically is in a given year. And a lot of that comes from people really asking themselves the question, what does work mean to me? Why do I work? What is the purpose?”
- Baby Boomers retiring. “I think the stress and just the difficult operating conditions of many businesses has caused people to say, look, my portfolio, my investments, my retirement is in a good place. There is no need for me to work another three to five years. I want to spend time with family, I want to have time to actually enjoy the fruits of my labors for my entire career.”